LeapRate's Daily Forex Industry Newsletter

Join now to receive first access to our EXCLUSIVE reports and updates.

Screenshot of a breaking news alert e-mail from Q2 2017

Please check your email to confirm your subscription

Something went wrong

We hate SPAM and promise to keep your email address safe

Switzerland’s central bank will keep its cap on the franc into 2017 to ward off the effects of the European Central Bank’s unconventional measures, according to Bloomberg News’s monthly survey of economists. More than half of respondents say the SNB won’t remove its ceiling on the franc of 1.20 per euro until that year or later. Just 3 of 18 expect an exit next year.

The franc hit a 26-month high versus the euro this week and was sitting just 8 pips above the 1.20 cap on Tuesday November 18th as investors bet the ECB will enact still more stimulus to shore up inflation. ECB President Mario Draghi Mario has said the central bank is ready to do more if needed and this week explicitly cited government-bond buying as a policy tool officials could use.

EUR/CHF: The SNB set the 1.20 limit three years ago after the franc nearly shot to parity with the euro amid Europe’s sovereign debt crisis.

“Since we expect the ECB to keep rates low until 2017, this in turn forces the SNB to maintain its minimum exchange rate,” said Birgit Heim, senior research analyst at Zuercher Kantonalbank in Zurich.

According to the survey, conducted Nov. 7-14, just one economist expects an exit this year and three each foresee it happening next year and in 2016. One respondent sees the ceiling being dropped in 2016 or later.

The SNB has pledged to defend its cap on the franc with unlimited purchases of foreign currency. The initiative would require the SNB, which currently holds about 8 percent of its assets in gold, to stock up on bullion in the next five years if it didn’t reduce its balance sheet.

Your Forex Industry Source

LeapRate is an independent research and advisory firm, specialized in covering the world of Forex trading. We are followed by hundreds of thousands of traders, investors and other FX industry participants via our website, Facebook, Twitter, LinkedIn, RSS and Email Newsletter.Email: info@leaprate.com